CORPORATE DIPLOMACY IN THE THIRD WORLD

CONSTRUCTEURS INGA-SHABA

A SOCIO-ETHICAL CASE STUDY OF THE INGA-SHABA EHVDC

INTERTIE PROJECT IN THE REPUBLIC OF ZAIRE

FROM 1973 TO 1983

The author delivering the Project Completion address in French before
an audience of 2,000 Zairians, Voice of Zaire radio & television, diplomats,
dignitaries and the international press corps. Kolwezi, Shaba Province,
August 1982.

Due to the potentially litigious nature of their content,
more than 45 footnotes have been omitted from the on-line version.

[No use may be made of this material without written permission from the author.]

A B S T R A C T

"Corporate Diplomacy in the Third World"
examines the covert machinations of our nation's most privileged executives
who are positioned to influence expenditure of hundreds of millions of
dollars, in conjunction with career diplomats and powerful political appointees.
The virtually limitless corporate power well within reach of multinational
firms in Third World settings is shown to be abusive, deleterious and corrosive
in relation to both the interests of the United States and the Less Developed
Countries.

Management errors are highlighted and financial
crises elucidated. Specific data are furnished, supported and confirmed
throughout this article, shedding light on the morally ambiguous roles
of major historical figures such as Larry Devlin, former CIA Station Chief,
Retired General Thomas Hayes, and Former U.S. Ambassador to Zaire, Sheldon
Vance, all of whom interacted with dictatorial, banking and corporate interests,
culminating in the ill-advised construction of the One Billion Dollar Inga-Shaba
Transmission Line, extending from the mouth of the Congo River to the copper-rich
region of Shaba, 1700 kilometers distant.

The Line was initially considered a strategic
asset by many, but has been proven to be a serious financial and environmental
liability in light of incessant civil unrest, instability and fiscal insolvency
in this exotic land of intrigue and mystery, dubbed by Joseph Conrad, The
Heart of Darkness.

Part I: Creation of the Consortium

Strengthened by a century of unbridled internal economic
growth, industrialization and technical development, the United States,
one of two world superpowers endowed, in the aftermath of the Second World
War, with unfathomable wealth and influence, was eager to turn its attention
to the Less Developed Countries of Asia, Africa and Latin America. The
nation's motivations, in so acting, were seldom altruistic, generally quite
self-serving, and invariably strategically or militarily focused.

Unlike the collectivist economies of the Soviet Union,
the Eastern Bloc, People's China, and many Third World Nations, the U.S.
private sector bristled with potential, featuring industrial and logistical
capabilities widely thought to be unparalleled in Post-War Europe.

Among the scores of multinational firms representing
America's internationally projected industrial might figured Morrison-Knudsen
Company, Inc., a monolithic entity, founded in 1912, immersed in a plethora
of pursuits, ranging from aircraft and locomotive maintenance to hydroelectric
turbines and massive mining operations, headquartered in Boise, Idaho.

Morrison-Knudsen International, a then fledgling subsidiary
of Morrison Knudsen Company, having drawn heavily on the Mother Firm's
7000 employees, had been active in the overseas sector prior to the Vietnam
War, yet rose to prominence as an integral component of the construction
consortium, RMK-BRJ, formed to design and build the elaborate air bases
at Tan-San-Hut and Da Nang.

Additional logistical and engineering tasks throughout
Vietnam, particularly in the Mekong Delta, ensuring security for the capital,
Saigon, were assigned to the MKI management team operating often as Prime
Contractor within the Consortium.

This mechanism had characterized the modus operandi
of MKI for several decades. During the early 1950s, well before their militarily
oriented endeavors in Vietnam, MKI had also formed a Consortium in Morocco,
Atlas Constructors, the principal objective of which was to design, develop
and build aerodromes, hangars, runways and ancillary facilities in the
then strategically vulnerable sector of the Cherifien Kingdom, not far
from Agadir.

Astute executives realize that legal shielding of the
Mother Firm is achieved through prudent juxtapositioning of a shock-absorbent
entity, itself temporary in nature and immune usually by presidential decree,
royal prerogative or strife-related privilege. These conditions could never
coalesce in the United States or in other industrialized democracies, where
harshly imposed legal remedies, professional malpractice suits and nine-digit
settlements are common in corporate circles.

While pre-feasibility studies, engineering support,
logistical capabilities, revolving credit facilities, and administrative
expertise can be drawn from the home-office, the Consortium is a technically
insulated operation, pursuing specific objectives in relation to the host
country's requirements and specifications. Further, it is responsible only
to the host government in terms of acting within local legal, managerial
and fiscal parameters.

In nations where laws are lax, subject to corrupt practices,or fundamentally unenforceable, the advantages which accrue to a properly
structured Consortium are enormous.

While labor unions in any given Third-World host country
are a minor factor, they can be silenced quite readily , as can judicial
authorities, through sweeping mandate obtained surreptiously by Management
from any compliant Magistrate, Deputy Minister, Parliamentarian or Military
Officer. Government imposed wage and benefit scales are pre-set, subject
to exceptionally narrow ranges of flexibility, plus or minus 14% usually,
in lands where inflation frequently attains, as in Zaire currently, 6000%
per annum, issuance of "New Zaires", the latest currency, notwithstanding.

In light of MKI's now highly developed strategic posture,
consisting of the "shielded consortium, cost-plus" contractual
vehicle, adopted for most of its overseas projects dating back to experiences
during the Second World War, when shipbuilding was a major focus of activity
largely in the American Trust Territories of the Pacific, the Corporation
was assuredly well positioned, decades later, in the 1970s and 1980s, to
embark on new projects, utilizing the same time-tested defensive measures
and structural mechanisms which had resulted in profitable, efficient and
successful operations elsewhere.

In 1973, then Retired General Thomas Hayes, employed
as an advisory consultant for MKI's potential projects, bid submission
policies and contract-leads, informed the Corporation's Boise Headquarters,
and the MKI Liaison Office in Washington, D.C., of a prospective client
in Equatorial Africa who would be willing to encourage American involvement
in a major undertaking, considered socio-politically controversial, but
economically and ideologically vital to U.S. and host-country objectives
and interests.

General Hayes had enjoyed a close, mutually adulatory
relationship with President Mobutu Sese Seko, whose accession to power
had been linked to CIA operations in the mid-1960s, subsequent to the assassination
of political arch-rival Patrice Lumumba, and the figurative emasculation,
or worse, of Joseph Kasavubu, Pierre Mulele, Moise Tshombe and Antoine
Gizenga.

The immense wealth of the former Belgian Congo, known
shortly after Independence as the Democratic Republic of the Congo, and
ultimately as Zaire, had been coveted by Europeans for generations. However,
this concentration of militarily and industrially critical resources had
come to the forefront of consciousness in the United States only during
World War II, when strategic minerals, including the actual uranium used
for Nagasaki and Hiroshima, were exported via N'Djili, the principal airfield
in Kinshasa, formerly Leopoldville, which featured Central Africa's most
impressive run-way, designed and constructed specifically for transhipment
of war-related goods and materials.

Indeed, the United States, in the early 1970s, acting
through contacts such as Devlin, Hayes, and Mobutu, initiated the process
of involving American industrial power in a potentially rewarding Third
World context.

Instrumental, as well, in the initial stages of project
planning -- which reportedly by-passed standard bidding procedures to the
chagrin of Belgian, French and Italian Firms -- were other influential
individuals whose participation in early negotiations was paramount. Their
roles were as crucial to lubrication of channels as was the catalytic,
and heretofore unacknowledged, interaction of former CIA Station Chief
Devlin and Ambassador Hinton, for example, representing the highest echelon
of 'dubiously authorized' influence.

Figure I, below, portrays in graphic format primary
patterns of communication which were established, at informal gatherings
in Binza, in the 1973-1974 time frame, prior to actual finalization of
the Inga-Shaba Project's prime contract, financing or mobilization phase.

_________________________________________________________________

DEVLIN------->MOBUTU<---------
HAYES

ZAIRIAN DEFENSE MINISTRY / BISENGEMANA
/ VANCE / HINTON

STATE DEPT / GAHIGA / MINISTRY
OF ENERGY / MKI-BOISE / MKI-WASH.

SNEL /CIS-ZAIRE

Figure I

(Chart Not Yet Properly Adapted for On-Line Presentation)

_________________________________________________________________

If General Hayes and Lawrence Devlin were the principal
American liaisons, whether in a sub-rosa, ex-officio advisory capacity,
as was the case of Mr. Devlin, or in a visible capacity, as was the case
with the General, then President Mobutu, himself, the primary host-nation
representative, whose personal decisions became tantamount to binding decrees,
served, obviously, as the sole and ultimate authority among Zairians.

Nonetheless, indispensable, behind-the-scenes negotiations
which both teams relied upon prior to the "ultimate decision"
were handled astutely by trusted members of the Zairian hierarchy, on the
one hand, and by American "corporate diplomats", in a manner
of speaking, on the other.

President Mobutu's Principal Counsellor, and in the
1970s Prime Minister for a brief interval, prior to the periodic "cabinet
reshuffling" well-known in highly centralized governmental models,
Citizen Bisengemana was a personage of power, dignity and erudition. His
influence swept across several Ministries; his word was virtual Law; his
advice and counsel heeded. This man, whose American equivalent might well
have been John Sununu, Chief of Staff during the Bush Administration, went
unchallenged in the halls of Mount N'Galiema.

Bisengemana was a direct link to The Presidency, and
was essential for purposes of relaying information to the Chief of State,
filtering up the chain of command from the well-connected Dr. Kari-Ngabo
Gahiga, President of a market research organization known as TransAfrika,
retained by Constructeurs Inga-Shaba (the then nascent consortium), MKI's
surrogate. The Principal Counsellor's hierarchical authority over the Energy
Ministry was also instrumental in gaining the unflinching cooperation of
this entity in later stages of project planning, namely throughout the
pre-feasibility and feasibility phases.

Lastly, SNEL, The National Electrical Utility, actually
MKI's client, fell technically under the authority of the Energy Ministry,
but enjoyed considerable autonomy, since Nzeza Makunsi, the President-Delegate-General
of SNEL, felt secure, as did his successor, Munga Mibindu, in appealing
directly to the President of the Republic in instances of crisis or conflict.

Turning to primary members of the U.S. team of diplo-corporate
players, we find, in addition to Larry Devlin and General Hayes, other
figures of note.

Dean Roesch Hinton, former Ambassador to Guatemala
and Chile, implicated in the overthrow of the left-leaning Guatemalan regime
and, later, of the Allende Government in Chile, was appointed Ambassador
to Zaire in the 1974 time frame.

While he was relatively tranquil in the initial stages
of his mandated term in Kinshasa, and participated in many of the duties
normally expected of a plenipotentiary diplomat, commendably representing
his country at such functions as the ceremony marking assembly of the First
Tower of the 1700 Kilometer Inga-Shaba Transmission Line, held in sweltering
heat at Gombe-Matadi in Bas-Zaire during November of 1974, he took advantage
of such occasions to persistently wedge himself into the relationship between
the MKI Consortium (CIS) and the Zairian Government.

This hardline political stance, foisting American ideology
on an African Government preparing literally to adopt the teachings of
Kim-Il-Sung, combined with the fast-moving, arguably Soviet-inspired events
of June 1975, got Ambassador Hinton, a decorated American career diplomat,
quite dramatically thrown out of Zaire, on the heels of an "abortive
coup", responsibility for which was summarily assigned to him by the
Mobutu Regime. Declared "persona non grata" and given 48 hours
to depart, Ambassador Hinton created a near-crisis situation in relations
between the U.S. and Zaire, daring to call into question the "integrity"
of President Mobutu, who, admittedly, had been responsible for the deaths
of tens of thousands of Zairians and the impoverishment of tens of millions
more.

Americans, during this period were warned by the official
daily newspaper, ELIMA, that, "If so much as a hair on the head of
our Guide is harmed, not a single American will leave Zaire alive."

In the period during which MKI was negotiating implementation
of the Prime Contract, however, Hinton interacted with former American
Ambassador to Zaire, Sheldon Vance, retained by MKI as a consultant, with
General Hayes and with high-ranking MKI functionaries, playing a significant
role in the laying of a foundation for finalization of arrangements financially,
logistically and administratively.

Ambassador Hinton's interests, it has been asserted,
were primarily the shoring up of an American corporate presence in Zaire,
a strategic nation, which could under no circumstances fall into the hands
of the Soviet Union, hovering in the wings across the river in Congo-Brazzaville.
In the USSR's quiver of arrows were to be found not only the Socialist
Regime of Denis Nguesso, but also Castro and the Angolan MPLA, all a threat
to stability in Zaire.

Sheldon Vance, former Ambassador to Zaire, had many
useful and powerful contacts in Kinshasa's Ministries. He was well acquainted
with the "nomenklatura", the pool of loyal talent from which
Mobutu periodically drew his Ministers, Vice-Ministers and Commissioners.

Indeed, Mr. Vance, in the final stages of his mandate
as Ambassador, had also reportedly interacted officially with General Hayes
and U.S. Corporate officials, holding out hope for increased industrial
and construction activity for American firms in this exotic land of intrigue
and mystery.

A cursory glance at the Zairian Defense Ministry is
in order. This crucial arm of Mobutu's government, providing enforcement
for severe domestic policies somewhat more effectively against his internal
civilian population, than against his militarily prepared external foes,
occupied an ambivalent role in Pre-Consortium Days. Mobutu personally assumed
the Defense Portfolio, serving as Head of State and Defense Minister. His
most trusted Generals were members of his own tribe, the Mongo ethnic grouping
from the M'bandaka area.

However, one well-positioned officer, in particular,
Colonel Umba, interacted frequently in the planning stages, and thereafter,
with CIS.Curiously, within 18 months of his cooperation with the
Consortium, he was accused of lese-majeste, high treason. Colonel Umba,
a European-educated career officer, erudite, cosmopolitan and intellectual,
had been implicated in the June 1975 coup attempt, blamed on the United
States, along with 10 other high-ranking FAZ officers, and was summarily
shot.

Primary stage props having been duly positioned by
key-players in the formulation of final arrangements for the structuring
of Constructeurs Inga-Shaba, events moved swiftly.

Early in contractual negotiations, the pre-feasibility
stage and preliminary financing efforts, MKI's Washington Office, interfacing
with Boise, provided professional input and expertise for the vital connections
required in New York, Chicago, Boston, and European financial circles.
As plans were drawn up from a technical perspective, administrative efforts
progressed as well. The multi-pronged approach which MKI had perfected
on prior contracts was put to best use, and all elements of the Inga-Shaba
Project fell, virtually without obstacle in the early days, into place.
The first Americans arrived on site in late 1973.

The original cost estimate for this 1200 mile-long
Extra High Voltage Transmission Line, linking the Inga Dam Complex at the
mouth of the Congo River to the copper-rich region of Shaba, was on the
order of $275 million dollars. Featured in this Gargantuan scheme were
two converter stations, state-of-the-art thyristor conversion technology
(provided by the Swedish), more than 8,000 pylons, a line-carrier telecommunications
system, four switching stations, access roads, administrative quarters
and ancillary facilities. Enormous quantities of power, rated at 550KV
in the first phase and 1100KV in the second, were envisaged.

It is obvious that MKI alone, diversified as this monolithic
entity was, would not have been capable of providing all services called
for under such an enormous prime contract. Logistical assistance and technical
expertise would have to be pooled from a variety of sources. Therefore,
the concept of a consortium was, not only to shield the Mother Firm from
possible legal recourse under International Law, but to maximize participation
of sub-contractors at less than American wage scales. As a result, profits,
net of payments to foreign sub-contractors at modest rates, could be handsomely
enhanced for the Home Office.

In light of these considerations, the Consortium, Constructeurs
Inga-Shaba, physically housed in a walled-in compound, featuring a high-rise
apartment building, shops, a company commissary, helipad, auxiliary offices,
warehousing space and independent generator and emergency water systems,
all located in an industrial suburb of Kinshasa, known as Kingabwa, ensconced
among Belgian, Greek, and French owned Breweries, Tobacco Processors, Coffee
Roasters and a variety of Mechanical Shops and Garages, began its complex
assignment in early 1974, an assignment, originally scheduled to be completed
in three or four years, that would stretch into the eight or nine year
range.

The composition of the Consortium, which remained constant
until virtual completion of construction activity, can be summarized essentially
as follows:

Morrison Knudsen International, Inc.-- Lead Partner responsible for administrative, logistical and manpower
support activities pertaining to the entire project. MKI, of course, retained
authority over all operations and coordinated scheduling, personnel, financial
and life-support (medical clinic, fleet of aircraft, vehicles, river craft,
and self-propelled barges) facilities.

Fischbach & Moore Company, Inc.-- This subsidiary of Morrison-Knudsen contributed to design and
logistical aspects of the Project, yet was financially linked with the
Mother Firm.

H.K. Ferguson-- A U.S. Based subsidiary of the Parent Firm, MK, providing unspecified technical support and occasional on-site consultants for brief periods.

International Engineering Company-- Obligated to prepare, revise and resolve all engineering and technical
issues; maintained final accountability for all technical aspects of this
project, including overseeing of ASEA's performance.

A.S.E.A.-- The Swedish
Firm, headquartered in Ludviga, in charge of all high-tech conversion equipment,
including valve halls, thyristor units and ancillary equipment.

Sadelmi-Cogepi -- An Italian
Firm contractually obligated to erect more than 8000 electrical towers
in accordance with strict technical requirements and standards, under hardship
conditions.

Other Sub-Contractors -- These
firms were retained for specific purposes, such as clearing underbrush
along the right-of-way and other vital support tasks. Technically, of course,
they were not part of the Consortium, per se, and had no authority
within the Consortium. SNEL, the Client, retained de facto influence within
the consortium, as did Dr. Gahiga's Firm for reasons of sheer expediency.

Thus, technical and financial groundwork having been
prepared in the U.S., with tangential input from the Zairian Government,
actual Mobilization and Construction commenced in early 1974.

Part II: Project Financing, Mobilization
and Construction

If the concept of constructing an infrastructural asset
as significant as the Inga-Shaba Line was politically controversial, logistically
challenging and economically dubious, the actual financing of the Project
was equally so.

Ostensibly, MKI contacts in major banking sectors led
to initial interest on the part of American Bankers. When it was learned
that, as is the case with most overseas U.S.-sponsored project activity,
EXIMBANK would secure, as guarantor of last resort, the entirety of the
Loan Package, in concert with Swedish and Italian Government backing to
a significantly lesser degree, the private sector leapt enthusiastically
aboard.

For its part, MKI was aware from the outset that the
standard 20% incremental contingency, cost-overrun provision , as well
as cost-escalation formulae, were to be included in the original estimate
submitted to the client, SNEL, and foresaw, consequentlya figure
on the order of 5 to 7% in profits. Given the initial bid of 250 Million
Dollars, plus 20% as explained, the approach adopted represented a minimal
theoretical profit, for a three or four year project, of between 15 and
21 Million Dollars, an attractive prospect for the Boise-based firm, whose
stockholders applauded from the sidelines. Inasmuch as MKI had, at any
given time, up to 80 massive projects around the world, the enormity of
revenues generated, after costs, can be readily appreciated.

When the Government of Zaire placed its signature on
the Order to Proceed, a complex mechanism was triggered, allowing IECO
to finalize its engineering studies, ASEA and GE to begin technical arrangements,
in accordance with the master construction schedule,and CIS to
commence the mobilization phase. Funds flowed directly to MKI-Boise for
procurement purposes, with Manufacturers Hanover generally disbursing draw-downs
when scheduled or required. Equipment, personnel and logistical costs were
initially handled by the Boise Office, with increasing weight, for obvious
reasons, being shifted to CIS as start-up proceeded.

Figure II indicates, in phantom, the major guarantors
positioned to provide assistance should defaults on debt and debt service
become too onerous for the Banking Consortium to absorb or renegotiate.
These institutions provided the perhaps false sense of confidence required
to prompt the private and semi-private sectors to finalize the master loan
agreement.

As costs escalated, over the nine-year life of the
project, U.S.Government agencies such as the Bureau of Reclamation confirmed
(1) the quality of work performed in Zaire, and (2) the amounts required
to continue project activity as a myriad of factors impacted progress.
The Bureau of Reclamation, a government watchdog, in effect, maintained
its autonomy rather effectively, with the exception of one employee, a
Zairian, which is unusual, who was offered employment in Boise's Computer
Department, a clear violation of conflict-of-interest and ethical standards.

Generally, BUREC's American employees, competent engineers,
seemed objective and forthright in their evaluation of the quality of CIS
work in Zaire. It cannot be forgotten, however, that massive sums of money
were available from a variety of "contingency accounts", in either
Zairian Currency or U.S. Dollars, and could easily have been routed unethically
to any individual whose surface integrity would otherwise appear intact,
unless he or she chose to depart precipitously. The Tax-Exempt Commissary
at the CIS Compound in Kingabwa was also reportedly the focus of occasional
probes and, frequently, the appearance of impropriety surfaced.

In spite of the foregoing peccadillos, major project
funding flowed from the U.S. Banking Consortium to MKI and CIS, with the
latter disbursing payments for sub-contractors.

Figure II portrays the normal flow of funding, as indicated
by simple arrows; nonetheless, it must be recalled that, in light of Bank
of Zaire defaults, which often triggered cross-defaults involving other
banking groups and institutions, the flow of capital was sometimes altered
dramatically, curtailed totally, or reliant on MKI's credit facility, serving
as a temporary buffer.

It would be valid to observe that uninterrupted flow
of funding for the Inga-Shaba Project was sensitive to fluctuations in
socio-political events, as well as to perception abroad of the degree to
which Mobutu's Government was willing to conform to international law and
relevant banking regulations. In light of the mercurial decisions and arbitrary
pronouncements of Citizen Namwisi, Finance Minister, whose influence is
not portrayed on Figure II, although it would be interposed between the
source of copper revenue and the Bank of Zaire, there were frequent crises
in financing and availability of capital for project advancement.

These impasses were generally negotiated, in their
preliminary stages by intervention at the level of Citizen Djamboleka,
Secretary of Finance, and later with the Minister himself, who usually
deferred to the nation's highest ruling body, The Executive Council, chaired
by the Prime Minister.

Failing payment or arrangement of new lines of credit
in any of the currencies used by the Project, CIS Management consulted
the U.S. Embassy and diplomatic leverage was exerted. This may not seem
unusual; however, bargaining was intense and the stakes involved were considerable.
Zairo-American trade relations, IMF and World Bank Grants, infrastructural
capital assistance, foreign aid, cultural and educational packages were
all held in abeyance, at various times, until monies flowed from Zairian
coffers to either Banking Consortium or CIS accounts. Frequently, the Zairian
Government retaliated in kind, by sequestering funds in the Bank for International
Settlements until their demands were met. As tension rose, the Deputy Chief
of Mission at the U.S. Embassy, with whom CIS dealt in intermediate stages
of most "crises", would consult the Ambassador, in the early
days, Hinton, later Oakley, and in the final stages of the project, Constable,
who would petition the Zairian Chief of State after consulting Washington
for instructions. MKI's Stateside operations, of course, had already laid
the groundwork there, thus ensuring that a rather rough ballgame was to
be played at the highest levels. Slowly, cash would begin to flow once
again, as Memoranda jogged Bank of Zaire functionaries into action.

During the nine year life of the Project, a wide variety
of events influenced decisions, progress and policies. In the early stages
of mobilization, which were frenetic and high-pressured, there were massive
deficiencies in the hiring process. Incompetency among newly hired employees
was frequent. Plush appointments were given career MKI employees within
the context of the Inga-Shaba Project, even though their skills were outmoded
or irrelevant. Figure III incorporates a random sampling of employees hired,
indicating insufficiencies, and estimated time on the job:

Although the preceding Figure does not purport to represent
a statistically significant sampling of mishired employees over the period
indicated, it is nonetheless clearly reflective of the types of deficiencies
and incidents which typified employee terminations throughout the mobilization
and construction phases.

It will be noted that Mean Duration In-Country can
be represented as M = 5.6 months, when the required employee contract stipulated
18 months minimum. A "defection" rate can be validly estimated
at approximately 30% of the 2000 odd U.S. employees hired throughout the
nine-year duration of the Project, or extremely conservatively 600 employees
terminated prior to fulfillment of contractual obligations. Footnoted below
is a reconstructed break-down of costs incurred per incompetent, disgruntled
or criminally-involved employee, a figure amounting to approximately $26,000,
multiplied times 600 such employees, resulting in 15.6 Million U.S. Dollars
simply in unnecessary employee turn-over, charged to the client, SNEL,
understandably loathe to pay, and ultimately absorbed by EXIMBANK and the
U.S. Treasury.

Coupled with (1) the onerous costs of two Shaba Invasions,
(2) the massive theft of Local Currency (referred to in Section Three of
this paper, which was labeled an "inside job" by CIS reinsurer
Lloyd's of London), (3) hidden graft, and (4) the egregious "fire-sale",
loss or theft of the construction material, heavy equipment and supplies,
captioned below:

Peterbilt Semi Flatbeds,

D-8 Caterpillar Units,

two well-equipped, 70-meter self-propelled
river barges,

25-Ton Grove Cranes, and

Tower Steel, among other costly supplies,

this minor 15.6 Million Dollar personnel "item",
assignable to the intrinsic ineptitude, socio-cultural bias and narrow-mindedness
of MKI headquarters employees, steeped in nepotism and old-boy recruitment
practices, added insult to injury, reflecting, at very least, on the alleged
professionalism of the entire MKI-led operation, and its adaptability to
Francophone Third-World settings.

It is not surprising, under these circumstances, that
overall Project cost soared to more than 1.1 Billion Dollars by the time
the internationally televised Tower Completion Ceremony was held in Kolwezi
in 1982.

It is only just to recognize the professionalism of
many CIS employees, some of whom sacrificed their health, families and
lives for this Project.

It is, however, reprehensible that, while MKI Executive
Vice-President Neal Spencer was shooting moose in the Northwest
Territories, drawing down a solid Fortune 500 salary, his subordinates
were mired in corruption, lethal rivalry, unethical transactions and carnal
intrigue which would have made this good man blanche with Conradian horror.

As will be observed, the socio-ethical implications
of the Inga-Shaba Transmission Line Project are as far-reaching as the
financial defaults, cross-defaults and rescheduling efforts which, by fits
and by starts, bailed out on-going project operations from the enthusiastic
Order to Proceed to the whimper of Demobilization. Indeed, while hard-working
family men and conscientious CIS employees were being demobilized, laid
off, terminated and flown to their respective "U.S. Points of Hire",
in keeping with the Reduction in Force underway, such was the cozy relationship
between then Project Manager Jim Miller and Reagan Appointee Ambassador
Bob Oakley that the latter's son, Tom, was actually hired preferentially
to work for CIS on-site, ostensibly in exchange for an "undetermined
favor" extended to the Project by the U.S. Embassy in Kinshasa, where
unemployment soared beyond 70% and human misery was rife.As if
to cement this relationship even further, he and his wife, Phyllis Oakley,
dutifully attended the CIS Manager of Logistics' Commemorative Service
held in 1982 on one of the Project's 70-meter barges, christened the "M/V
Jack Langland." She later became a highly visible State Department
Spokeswoman in Washington.

PART III: Crisis Management, Sociological
Impact and Implications for Future American Project Activity in the Republic
of Zaire or Under Successive Regimes

In Zaire, where conditions were volatile on all fronts,
it would be fair to assert that daily crisis-management became an art form.
Not only was the magnitude of this project conducive to a constant barrage
of mini-crises, such as helicopter crashes, accounting discrepancies, medical
emergencies, or even homicides, but crises with broader implications also
plagued the very survival of the Project.

It would seem appropriate to review three significant
crises, rather than to concentrate on the sensational aspects of day-to-day
management, in the hope of exploring primary mechanisms and modalities
which lead to resolution of such dilemmas. This approach may also best
assist students of management who, doubtless, will be required to resolve
similar issues, if assigned to future Third World projects.

The UNTZA (Union Nationale des Travailleurs du Zaire)
was sub-divided into industrial sectors for purposes of representing the
nation's labor force. The Electrical Sector, also embraced the Petroleum
Industry, since both were Energy Related. A General Secretary was assigned
to each such sub-division and visited work-sites throughout the capital
(and nation) on a regular basis. Annually, negotiations were scheduled
as a function of the Secretary's availability. The Belgians had instilled
in Zaire's labor force the essential notions of dignity, decorum and wages
commensurate with productivity and skill. However, twenty years after Independence,
many of the finer points of Belgian Labor Law had been reformed, amended
or modified by the Presidency.

Under the prevailing rigid military regime, of course,
workers had no real bargaining power. Strikes and protests were routinely
suppressed by brute force in Zaire. This state of affairs played nicely
into the hands of CIS management which immediately recognized that power
lay squarely in the hands of pro-regime elements, such as ANEZA (The National
Association of Zairian Businesses, chaired by a Mobutu crony, Mbemba, owner
of SCIBE-ZAIRE, a charter air-freight firm), the antithesis of the UNTZA.

Wage scales mirrored vaguely the Franco-Belgian model
inherited from colonial days, featuring a SMIG, a Thirteenth Month Bonus
and other typical European vestiges which provided for certain social benefits
(prescription medicine, burial costs and school uniforms, for example).

Figure IV indicates the three major employee categories
and prevailing wage ranges for each in the 1980-1983 time frame:

LABOR CATEGORIES AND
WAGE SCALES IN THE REPUBLIC OF ZAIRE 1980 TO 1983

Labor Category / U.S. Monthly
Salary Equivalent

Laborers (Unskilled to Skilled)................$11.00
to $45.00

Supervisors (Low to High Echelon)...............$30.00
to $65.00

Administrative (Non-Degreed to Degreed.........$40.00
to $150.00

___________________________________________________________________

FIGURE IV

Throughout the early 1980s, inflation levels had attained
approximately 440% per annum. The bulk of the CIS workforce, as was the
case throughout the Republic, was, of course, comprised of Laborers, many
with seven or eight children. Naturally, wages of fifteen or twenty dollars
per month were woefully inadequate to cope with the local cost of living,
rising exponentially virtuallyweekly.

Discontent and unrest were frequent under such circumstances;
theft was common; crime and bribery were encouraged under this scenario.
Kitchen employees were thrown into the street by the U.S. Camps & Commissary
Director for stealing so much as a quarter-pound of butter. This was the
case of Abdull'ah, for example, who was terminated for cause (the 1/4 pound
of butter); he was fortunate, however, since his family was in a position
to support him for several months while he attempted to clear his reputation.

Annual Labor Negotiations focused on wages, benefits
and promotion criteria. However, account had to be taken of the socio-political
realities of Mobutu's Zaire, controlled surprisingly not so much by Mobutu
who, at times, seemed to demonstrate some sympathy for his people (offering
ambulances to the local hospital, named after his mother, Mama Yemo, and
authorizing the occasional public-sector building, such as the Chinese-constructed
People's Palace in Lingwala), but by such International Financial Institutions
as the IMF, headed alternately, during pre-Project and Project years, by
Blumenthal and Jubinville. Both the Government and the IMF imposed stringent
limits on the amounts and percentages by which salaries could be increased.

Because of the narrow range of increases permitted
Union negotiators, amounting to a maximum of 14% per annum applied to base
salary figures, there was very little latitude for UNTZA union delegates.
In fact, they could request enhancement of fringe benefits, press for the
maximum raise, and convince their Members that a "victory" had
been achieved. CIS Management was ecstatic, of course, since local currency
was virtually available for the "mere printing" in Zaire (see
Appendix B), although some accounting of local expenditures had to be enforced
and tracked to comply with local regulations.

Essentially, labor, for purposes of this analysis,
was at the mercy of management in Kinshasa.

The UNTZA Secretary General, assigned to the principal
CIS worksite in Kinshasa, but with binding effect for line-camps and Project
Sites all across Zaire, led elaborate negotiations, excelled at rhetoric,
all of which was rendered bilingually by CIS Translators, and gestured
theatrically. When the dust had settled, however, and the handshakes of
fellowship and crafty winkshad been exchanged, more than 2000 workers,
with perhaps as many as 20,000 dependents, had been given a raise and benefit
package that would be eroded completely by inflation in mere weeks. In
spite of this obvious phenomenon, CIS Management, calling the shots surreptitiously
on both sides of the table, found it necessary to "provide a small
token" of their gratitude to the UNTZA National Secretary. In 1982,
it consisted of a $180 electronic harmonica from Brookstone, a gadget which
caught the fancy of UNTZA Secretary Issilonga who had literally bartered
the futures, health and lives of 22,000 men, women and children, his own
countrymen, to satisfy his materialistic and momentary urge to play the
Pipes of Pan.

We turn to the second arena of concern which, left
unattended, might have threatened the Project's overall welfare and integrity:
the realm of finance. High finance has been touched upon in some depth.
It was a treacherous world of threat and counter-threat, bluff and blush,
thrust and parry. Yet, there was a less highly visible realm of sordid
finance, as well, on a smaller scale where six digit sums, a mere bagatelle,
were at stake.

The Accounting Department awoke one morning to find
that five hundred thousand dollars in local currency had disappeared from
the solid concrete vault during the night. A three foot hole had been bored
in the vault from an adjoining compound. Guard dogs had been poisoned in
the neighboring Compound (a Greek-Owned Garage), and all signs pointed
to a major plot with inside knowledge of the timing, amount and whereabouts
of the funds. Ultimately, Lloyd's of London refused to reimburse CIS, convinced
of intracorporate complicity, and the Security Department compiled a compendious,
but inconclusive report white-washing everyone. Ultimately, individuals
plausibly connected to this incident began to disappear, through simple
attrition, or through elimination. Appendix A speaks eloquently of the
numbers of individuals associated with this case and other debacles, too
frequent and detailed to enumerate, who paid eventually with their lives.
High finance, therefore, was not the only stadium in which this sport was
practiced.

Logistical challenges on this mega-project constitute
still another massive sector of activity, fertile ground for lengthy discussion.
Suffice it to say that, here too, boondoggles abounded.

Although many insightful and well-reasoned decisions
were, of necessity, made during planning and execution of the construction
phase of this mammoth undertaking, the Equatorial Rain Forest, Savannas
and Rifts of Zaire proved to be worthy opponents.

Voluminous studies were made on methods of transporting
heavy equipment, over-sized loads and massive quantities of supplies across
Zaire, Angola, Mozambique and Zimbabwe, all plausible routes:

1. Sixty pages, and tens of
thousands of dollars, for a study on the "lift capacity" of the
Angolan Port of Lobito;

2. Frivolous Junkets to Beira
in Mozambique to study routing patterns, political factors and shipping
costs;

3. Unnecessary Meetings in
Harare, Luanda, Lubumbashi and Dilolo.

Indeed, the deliberations of engineers, logisticians
and transit specialists culminated in occasionally effective, but oft disastrous,
decisions, costing hundreds of thousands of dollars.

ONATRA, the Zairian Office of Transportation, ultimately,
and predictably, provided most of the valid answers. Citizen Kanyama, Director,
was most obliging, as he replaced a distinguished, but aging Belgian Official
with an impressive bleach-white handlebar moustache.

Concluding Observations

The tragic deaths, instability,
economic crises, sheer distances, not to mention the dubious objectives
envisaged, all point to a somber outlook for continued corporate involvement
in Zaire. Whether this combination of internal mismanagement, graft, crime
and inefficiency can be avoided in the years to come is solely dependent
on (1) the host country, (2) the corporation and (3) the unpredictable
characteristics of human behavior, unlikely to change in the foreseeable
future.

The murkiness, miasma and
mire which made Zaire, in the 1970s and 1980s, the essentially inviable
place that it is, in spite of the appealing exoticism of the locale and
the hospitable passivity of its people, are, we are sorry to note, not
about to change under post-Mobutu governments in the decades ahead.

Nota Bene: These amounts were subject to privately negotiated
adjustments, as Sozacom revenue fluctuated and other variables affected
availability of foreign currency in Zaire's account at the Federal Reserve
Bank of New York and elsewhere.

Art Madsen, M. Ed., served in
Kinshasa as Chief Translator/Interpreter for the Inga-Shaba EHVDC Intertie
Project for a period of five years, in 1974-75 and 1980-83. He interacted
personally with the Zairian and American dignitaries mentioned in this
article, and has acquired an in-depth, on-site understanding of covert
American corporate involvement in Algeria and Congo-Brazzaville, in addition
to Zaire.

His specialties have been Administration,
French, Psychology and Investigative Research. He translated and published
The Zairian Labor Code, The Congolese Five-Year Plan, plus
Contractual Documents for the El Outaya Salt Refinery in Algeria,
for industrial use, and has taught, lectured and appeared at news conferences
and on television broadcasts in Zaire and Congo-Brazzaville.

He is currently conducting human
rights research in El Paso / Juarez where he resides, monitoring conditions
along the U.S./Mexican Border, in his capacity as Acting President of a
small research firm based in the area.